What is an investment club?

Would you join a safe stock market investment club where you met regularly with friends to have a good time, learn something, and hopefully make some money? If you said yes to that statement, you might want to consider joining, or starting your own, investment club. One of the most popular offshoots of investing is the investment club. You may have heard about a local investing club through your place of employment, or even through a class. The basis of many investment clubs is often the common locality of the members. In some cases, graduate schools even advertise their investment clubs as extracurricular activities.But it may still leave you wondering, just what is an investment club?

An investment club (which is sometimes called a stock club) is comprised of individuals who pool their funds in order to make investments that would otherwise be beyond their means.They buy stocks, however, not before they research these stocks well. Investment clubs are considered a small business for purposes of tax returns. These clubs are generally social groups of like-minded people who want to see their money grow.If you are interested in the stock market (and if you want to gather information on a particular set of stocks) then joining an investment club may be right for you.

Most, investment clubs are run in a democratic fashion.Members, as a collective, will elect their officers (this usually consist of a president or spokesperson, a treasurer etc).The club will also vote on stocks, bonds or securities. They will focus on which investment vehicles they want to purchase, how many they want to buy, whether or not they want to sell, whether or not the interest rate is conducive to a comfortable amount of growth.

Investment club officers generally delegate who researches which stocks.This research can consist of any number of different methods including but not limited to: stock market profiling, looking at or visiting the individual companies (if they are local) in which you may be interested in investing, and even historical comparisons.Stock prices will be a driving factor in the purchase of individual shares as are growth futures.

In order to be considered active and not a security (keep in mind that securities must register with the SEC), an investment club's membership must all participate in the purchase and sell-off of all stocks.Members usually contribute capital (cash) on a regular basis.This can be weekly, biweekly, monthly, bimonthly, or so forth, depending upon the individual club.Some clubs will require members to contribute $25 a week, while other may go as high as, $150 a month.

Before you join an investment club, it is critical to take a look at your finances. Keep in mind that it is the first rule of investing, not to use money that you will need for purchasing a home, funding an education, or any other significant purpose. In addition, you should never invest money that you cannot afford to lose. In addition, if you are in severe debt, you shouldn't join an investment club, as the odds are you will lose money before you begin to gain any.

Before joining an investment club it is important to ask yourself if you can be satisfied with a learning experience. You should be fully prepared to never realize a profit from the stock market. Keep in mind that one of the key parts of an investment club is the benefit of studying the stock market with other people, with the same interests as you.
Investment clubs are great ways to get to know the stock market in a safe, supportive, and fun environment.